Why NeoStem, Inc. Shares Popped

Is this meaningful or just another movement?

Although we don't believe in timing the market or panicking over market movements, we do like to keep an eye on big changes -- just in case they're material to our investing thesis.

What: Shares of NeoStem, Inc.(NASDAQ:NBS) closed the trading day with a gain of roughly 9% after peaking in the morning at a 10% pop. The small biotech company is enjoying a wave of positive sentiment after announcing that it has been granted two new patents for its CD34 cell program.

So what: NeoStem's patents cover "Compositions and Methods of Vascular Injury Repair," according to the company's press release, and will protect a broader range of serum concentrations for CD34 cell delivery than did earlier patents. CD34, which is developing treatments for ischemia (a restriction of oxygenated blood) now boasts 16 patents, and the latest two cover AMR-001, which is the most promising treatment in the CD34 program. AMR-001 is a stem cell product derived from bone marrow that is designed to increase blood flow by aiding the development of new blood vessels, and its Phase 2 study wrapped up at the end of last year, with full data expected in the latter half of 2014.

Now what: NeoStem investors have been waiting years to see genuine good news about its pipeline, and the lack of such news has contributed to a 10-year loss of 94%, and a five-year loss of 63%, of the stock's value. A couple of patents aren't much to cheer, especially when they cover a treatment that hasn't begun phase 3 trials yet -- it's standard practice in the industry to patent newly developed treatments, and such events matter far less than the treatment's eventual approval. I wouldn't read anything into today's patent news -- Neostem is the same company today that it was yesterday, except with two more patents in its hands.

Author

Alex Planes specializes in the deep analysis of tech, energy, and retail companies, with a particular focus on the ways new or proposed technologies can (and will) shape the future. He is also a dedicated student of financial and business history, often drawing on major events from the past to help readers better understand what's happening today and what might happen tomorrow.